Jordan calls on Israel to cede control over Palestinian economy

April 14, 2017 10:16 P.M. (Updated: May 8, 2017 12:45 P.M.)

BETHLEHEM (Ma’an) -- The Jordanian government demanded that Israel freeze the Paris Protocol on Economic Relations, part of the Oslo agreements in the 1990s that has severely restricted the Palestinian economy, in order to increase Jordanian exports into Palestinian markets, Jordanian Industry, Trade and Supply Minister Yarub Qudah reportedly said on Thursday.

The 1994 protocol was expected to be a five-year interim agreement between Israel and the Palestinian Authority (PA) that gave Israel nearly complete control over the occupied Palestinian territory’s economy, including the control of all the territory's borders, the collection of import taxes and VAT on all products, enforcing the sole use of the Israeli shekel in the Palestinian economy, subjecting all Palestinian products -- even those headed to a third country -- to Israeli supervision and regulations, and other restrictions.

Arabic-language newspaper Alghad reported on Thursday that during discussions with Jordanian businessmen days ago, Qudah had said that Jordan’s Industry and Trade Ministry has started to focus on increasing Jordanian exports to Palestinian markets.

Qudah said that the Israeli authorities demanded to go through trilateral negotiations between the Palestinians, Jordanians, and Israelis. However, the Jordanian government has continued to insist on freezing the protocol altogether before starting any trade negotiations.

Qudah noted that Israeli exports to Palestinian markets have exceeded $3.8 billion, while Jordanian exports to the territory are estimated to be less than $100 million.

According to Israeli rights group B’Tselem, Palestinian leaders had initially signed the protocol owing to a stipulation that allowed Palestinians to continue to work in Israel, since at the time the PA was unable to provide employment to tens of thousands of Palestinians already dependent on jobs in Israel.

“This kind of relationship -- unlike economic separation or establishment of a free-trade area -- was preferable to Israel, which did not want to establish an economic border with the Palestinian Authority, an act that would give a clear flavor of sovereignty and create a binding precedent on the eve of the final status stage,” B’Tselem stated in reference to the widely criticized Oslo peace agreements.

The protocol has drastically stifled the Palestinian economy for more than two decades, and has had far-reaching implications on even the political spheres of the Palestinian territory. Israel’s collection of taxes imposed on Palestinian imports and income has made tax clearance the largest section of the Palestinian economy, with the UN noting that in 2014, tax clearances by Israel accounted for 75 percent of Palestinian revenue.

The economic protocol has enabled Israel to “delay transfer of taxes that it collected for the Palestinian Authority, or threaten delay in transferring the monies, as a means of pressure or punishment,” according to B’Tselem, which the Israeli government has done several times since the agreement was signed for various reasons, including as punishment for Palestine joining the International Criminal Court (ICC).

Since the taxes represent such a large chunk of the Palestinian economy, Israeli authorities can swiftly send the occupied territory into financial chaos as an effective means of political control.